Question

Liliana Alvarez’s employer offers its workers a two-month paid sabbatical every seven years. Liliana, who just started working for the firm, plans to spend her sabbatical touring Europe at an estimated cost of $25,000. To finance her trip, Liliana plans to make six annual end-of-year deposits of $2,500 each, starting this year, into an investment account earning 8% interest.
a. Will Liliana’s account balance at the end of seven years be enough to pay for her trip?
b. Suppose Liliana increases her annual contribution to $3,150. How large will her account balance be at the end of seven years?